A Green New Deal?

In her newstatesman.com blog, Green Party leader Caroline Lucas says it's time to make finance the s

After the bursting of the credit bubble in August, 2007 Alastair Darling repeatedly assured us that Britain’s ‘economic fundamentals’ are sound. The implication was that the ‘real’ economy was quite distinct from the bubble economy inhabited by bankers, short-sellers and hedge fund managers. Consumers were given the impression that a firewall existed between them and the bursting credit bubble.

It now turns out that there is no firewall; even the chancellor has to acknowledge negative feedback loops between the financial economy and the real economy. It is not possible, after all, to compartmentalise within the economy, any more than it is possible to erect firewalls between the ‘real economy’, the credit bubble, and climate change.

It is clear that the three are inextricably linked.

Easy money has financed easy shopping, and easy shopping has boosted production and energy use in countries around the world. As we re-financed mortgages, maxed out on credit cards, invested in buy-to-lets, shopped for 4x4s, handbags and sports trainers.

So we burned more finite supplies of oil and coal, and this boosted manufacturing and production in far-away places, and powered economic growth. And as we burned up these precious, scarce resources, as we stripped more forests, farmed more land, fished more fish – so the earth grew more dangerously warm and less diverse.

Somehow, something, somewhere had give. These old ideas - that we could live forever on borrowed money and on borrowed time and that there are no limits to the earth’s resources – were a series of bubbles that had to burst.

The credit bubble was the first to go - on 9th August, 2007 when banks froze lending and plunged the global economy into a crisis that is still unfolding today, and becomes more terrifying as each day passes.

The shopping bubble has proved more resilient. While there are signs that UK consumer confidence is waning, the government’s national statistics office announced in August that growth, albeit moderate growth “in retail sales volume is driven by strength in clothing and footwear stores.”

So we are still shopping for clothes and shoes. So much so that developers are confident enough to open three new massive shopping centres in London, Liverpool and Bristol.

But while we shop, an even graver threat than the financial crisis is looming: the ‘bursting’ of the greenhouse gas bubble.

The melting of Arctic sea-ice, the rise in methane emissions, rapid de-forestation and increased droughts all create positive feedback effects. Forests are no longer carbon dioxide absorbers, but instead produce carbon dioxide. Thick permafrost no longer bottles up methane; instead it melts, spewing out methane and magnifying climate change.

And still the Labour government baulks at the scale and urgency of the threat to our security. And at the scale of adjustment, adaptation and investment needed to address the threat. Britain’s economy must undergo a major structural adjustment, to adapt to the threat posed to our security by climate change.

But, while the financial adjustment is already happening - albeit chaotically - the economic adjustment has yet to be addressed.

Just two weeks ago Labour ministers seemed to promise an expansion of airports, motorways and coal-fired power stations. We were offered no leadership, no vision of the much more ambitious drive for energy efficiency that is needed, or of the large-scale alternative energy investment that is vital to our security.

What is the way forward? Along with eight other green economics experts, I have co-authored a report that shows us the new direction we need.

We need a Green New Deal, based on increased regulation of the finance sector, so that finance once again becomes servant to the economy. As in the New Deal era of the 1930s, we need low interest rates and minimal tax evasion if we are to finance the massive investment needed for a multi-billion pound crash programme to make every building in the country a power station, while maximising the UK’s use of small and large-scale renewables. We need to mobilise a carbon army of green-collar workers to implement this programme. Finally we need to localise the production of food, and build a more sustainable local economy in food and other resources.

It is only such a programme that could give the people of Britain hope; that could help Britain survive this crisis, and enable our citizens to live better, more happily, and within the limits of our ecological budgets.

Caroline Lucas is the MP for Brighton Pavilion.

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Commons Confidential: Fearing the Wigan warrior

An electoral clash, select committee elections as speed dating, and Ed Miliband’s political convalescence.

Members of Labour’s disconsolate majority, sitting in tight knots in the tearoom as the MP with the best maths skills calculates who will survive and who will die, based on the latest bad poll, observe that Jeremy Corbyn has never been so loyal to the party leadership. The past 13 months, one told me, have been the Islington rebel’s longest spell without voting against Labour. The MP was contradicted by a colleague who argued that, in voting against Trident renewal, Corbyn had defied party policy. There is Labour chatter that an early general election would be a mercy killing if it put the party out of its misery and removed Corbyn next year. In 2020, it is judged, defeat will be inevitable.

The next London mayoral contest is scheduled for the same date as a 2020 election: 7 May. Sadiq Khan’s people whisper that when they mentioned the clash to ministers, they were assured it won’t happen. They are uncertain whether this indicates that the mayoral contest will be moved, or that there will be an early general election. Intriguing.

An unguarded retort from the peer Jim O’Neill seems to confirm that a dispute over the so-called Northern Powerhouse triggered his walkout from the Treasury last month. O’Neill, a fanboy of George Osborne and a former Goldman Sachs chief economist, gave no reason when he quit Theresa May’s government and resigned the Tory whip in the Lords. He joined the dots publicly when the Resolution Foundation’s director, Torsten Bell, queried the northern project. “Are you related to the PM?” shot back the Mancunian O’Neill. It’s the way he tells ’em.

Talk has quietened in Westminster Labour ranks of a formal challenge to Corbyn since this year’s attempt backfired, but the Tories fear Lisa Nandy, should the leader fall under a solar-powered ecotruck selling recycled organic knitwear.

The Wigan warrior is enjoying favourable reviews for her forensic examination of the troubled inquiry into historic child sex abuse. After Nandy put May on the spot, the Tory three-piece suit Alec Shelbrooke was overheard muttering: “I hope she never runs for leader.” Anna Soubry and Nicky Morgan, the Thelma and Louise of Tory opposition to Mayhem, were observed nodding in agreement.

Select committee elections are like speed dating. “Who are you?” inquired Labour’s Kevan Jones (Granite Central)of a stranger seeking his vote. She explained that she was Victoria Borwick, the Tory MP for Kensington, but that didn’t help. “This is the first time you’ve spoken to me,” Jones continued, “so the answer’s no.” The aloof Borwick lost, by the way.

Ed Miliband is joining Labour’s relaunched Tribune Group of MPs to continue his political convalescence. Next stop: the shadow cabinet?

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage